Is business transformation leading to CFO burnout?

It has been a troubling few years for all of us, especially businesses riding the wave of pandemic shutdowns, the energy crisis caused by the Russia–Ukraine conflict, and the ever-rising inflation causing the price of goods to shift almost daily.

For a job in which accurately managing and forecasting company finances is essential, like the CFO, it can feel like an impossible task.

However, according to the 2023 Global Mid-Market CFO Sentiment Study by the CFO Alliance, there is an 80% CFO Confidence Rating in their enterprises’ ability to hit their financial targets in 2023. Yet, the same study finds that 25% of CFOs are considering a career move.

The evolving role of the CFO

It is suggested that the role of CFO has shifted dramatically within the past decade, with one of the major changes being a shift from ‘bean counters’ to essential decision-makers within the executive team.

“The last decade has really been a decade of big data … businesses are demanding more granular insights, they’re demanding it to be digested and analysed … and delivered as close to real-time as possible … the expectations around reporting cycles and timelines have shortened and the level of KPI detail has deepened,” says Hugh Courtney, CFO for Zilch.

A study run by The Hackett Group also found that CFO workloads were increasing by around 8%. The study also noted staffing levels were declining, and budgets were, on average, being cut by 2%.

Shawn Fitzgerald, senior director at The Hackett Group, said the technology could help stem part of the problem, but would not solve everything. “Investment in technology is going up 5%, Tech can help to offset a reduced operating budget and headcount,” he says. However, Fitzgerald also noted that without proper planning and change management, the deployment of new tech was unlikely to be successful.

“When going through a tech implementation, we say to remind ourselves that tech without process can go from zero to chaos at the speed of light,” he says.

The need for business transformation

For many, the pandemic really highlighted the need to automate, and possibly even rethink finance team functions.

“There are a few things that are really key here,” says Zilch’s Courtney. He says ensuring engagement across all teams, including leadership, is where tangible benefits can be realized quickly. “Deploying the right resource into division can make all the difference to diagnosing and fixing problems early,” he says.

According to Hackett’s Fitzgerald, companies no longer need to buy technology outright since there are so many third-party services that can be used to automate certain functions. However, with this sense of ease comes an added risk of cyber-attacks, meaning CFOs need to partner with their CIO and CTOs to ensure that new technology is market-tested, low-risk, and fit for purpose.

There is a huge expectation to not only digitally transform businesses but to do so in record time. While step changes are generally considered a good thing, it leaves many to wonder why everyone is in such a rush.

Many CFOs may feel pressured to commit to an expedited timeline for change, without a legitimate business need. Fitzgerald acknowledged that a lot of the time, it can feel like a box-ticking exercise and is often only deemed successful if done by a certain date.

“It’s never going to be perfect the first time,” he says. “There needs to be an appetite to transform but recognise that it’s not going to be perfect in version 1.0. Without thoughtful process redesign, we will not be successful.”

Redesigning the role of CFOs and finance teams

Along with the pressure to transform finance functions in record time, CFOs are expected to do so with fewer heads and limited budgets, requiring them to do more with less.

“The danger as finance teams generally become smaller, [means] the CFO tends to end up in the weeds, rather than focusing on that high-level strategy”, says Courtney. “Decision-making should be distributed across the business. The link between strategic finance and business partnering is really key.”

Speaking on the teachings of Geoffrey Colvin in his book ‘Humans Are Underrated’, Fitzgerald noted it can be challenging when you have people who have been in clerical accounting roles “forever”, and the need to automate work becomes a business necessity.

“In this digital era [Colvin] talks about how the most valuable people can exchange complex ideas. It’s really important that we engage the human-to-human interactions.”

For Courtney, his belief is allowing businesses to “self-serve”. He notes that there is a “tonne” of “really smart tools” available to businesses but there were also boundaries that need to be clearly defined.

Decentralising decision-making power requires a certain level of trust between management and their teams, which appears to be in line with the findings of the CFO Study, which states that CFOs have been shifting spending from talent acquisition to talent optimisation.

“Things run more smoothly with already established relationships and an understanding of internal politics,” says Fitzgerald.

Overcoming challenges

With all this change, there are major challenges faced by CFOs in trying to build their businesses optimally. For instance, the move towards new technologies will likely mean more for finance teams, in a way that will be radically different to processes already in place, Fitzgerald says.

As a result, he says CFOs are looking for “data science types”, people who can analyse and look at data differently.

“All production systems have an infinite capacity for work until you bind them to time, I’ve only got 24 hours a day, seven days a week,” Fitzgerald adds. “Then you look at the additional disclosure requirements like Sarbanes Oxley and now we’re seeing more of that with ESG.”

Another major challenge is the financial famine that has come after a period of relative excess. Courtney explains that when cash was cheap and in high supply, the startup work forgot how important finance leadership really was.

“For a CFO this is the perfect storm of a limited availability of cash, high inflation, and new expectations from stakeholders,” he says. “We also need to give short-term reassurance in the face of this uncertainty. So, balancing that financial discipline [without] stifling growth and innovation is a difficult act to follow.”

There is an impression that CFOs are now expected to be on the pulse of everything financial, as well as current events, new technology and their associated threats. However, Fitzgerald disagrees that CFOs should be the source of all knowledge.

“Einstein used to say knowledge is of two types, you either know everything or you know where to get it. The Superhero CFO of the future is the one who is knowledgeable about all things finance [and has] this expert network,” he says.

What is the outlook for CFOs in 2023?

While many CFOs appear to be rising to the occasion, and reasonably optimistic about financial recovery, it still does not change that 25% are considering making career moves possibly due to having to operate under these enhanced expectations.

“I don’t think CFOs are without their battle scars,” says Courtney, listing off the challenges which arose from Covid, the war in Ukraine, and a general sense the “world is going to end.”

Based on a study conducted by Deloitte, while CFOs are feeling more confident about financial prospects overall, more than a quarter of firms remain pessimistic. Deep pessimism prevails in Europe leading to a continued lack of confidence from CFOs in their companies’ financial prospects, the study finds.

However, the importance of having competent finance people ate helm has also been top of mind over the last few years.

“There’s a lot of demand across all industries for good finance people, they probably have a lot of compelling approaches coming their way, and that’s probably what’s driving sentiment around considering career moves”, adds Courtney.

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